Warning to Aerospace & Defense Companies: Optimize Supply Chain or be Left Behind

Warning to Aerospace & Defense Companies: Optimize Supply Chain or be Left
Behind
Deloitte offers five new techniques companies must implement to boost
performance

NEW YORK, Jan. 15 /PRNewswire/ -- New information from Deloitte Consulting
LLP's Aerospace and Defense industry group indicates that the risk of failure
for A&D companies is "real and significant" if companies don't implement
changes now to help ensure the longevity and success of their supply chains.
"The risks are imminent," said Jim Schwendinger, vice chairman, global
aerospace & defense, Deloitte Consulting. "Costs and inventories are growing,
service levels are lagging and products are not making it to customers on time
or on budget. Significantly optimizing your supply chain for high-speed
performance is an effective way to deliver what customers and the market
expect."
Achieving supply chain success, Deloitte says, will likely involve
enterprise-wide changes. As programs become larger and more global, the
complexity of managing the supply chain grows tremendously. Aligning supply
chain capabilities with the company's corporate strategy and growth objectives
is key to building a sustainable, integrated model.
"Over the past year the A&D industry has suffered numerous service issues,
many as a direct result of inefficient supply chains," said John Coykendall,
principal, Deloitte Consulting. "These difficulties have resulted in enormous
cost overruns, delayed new product rollouts, missed delivery dates, and have
forced companies to make serious adjustments in production which, in turn, has
affected their entire supplier network."
These major setbacks, Coykendall says, are many times the result of supply
chain breakdowns. While companies frequently attempt to improve supply chain
performance, too often the approach to solving one challenge creates
disruption elsewhere in the supply chain. By taking an integrated supply chain
view, companies can drive improvements in performance while also reducing
costs.
"Supply chains have traditionally been depicted as linear streams, and
this narrow view can lead to missed opportunities for improved integration of
supply chain capabilities," said Schwendinger.
Five techniques A&D companies should use to boost supply chain performance
include:
1. Aligning supply chain and business strategy: Critical product
decisions are made early in the life cycle. Careful thinking about
aligning supply chain network strategy with business strategy early can
drive performance down the road.

2. Integrating multiple supply networks: Knowing when and where to
integrate supply chain networks is critical. Single supply chains that
serve all businesses will typically under-perform on both cost and
service objectives.

3. Aligning and integrating supply chain planning: Poorly integrated
planning activities can be detrimental. Companies need tight
coordination and integration of demand plans, inventory plans and
production schedules.

4. Strategically managing the supply network: Aligning the supply chain
organization to facilitate better decision-making is imperative.
Businesses must manage multiple linkages and dependencies within the
network to gain flexibility and competitive advantage.

5. Mitigating tiering risks: Companies must provide a consolidated view of
demand through multiple supply chain levels. As visibility has shifted
away from OEMs to tier one, supply chain managers must increase their
focus on tier two and tier three players that have dropped below the
radar.

Companies who are ready to initiate the process now, Deloitte says, should
begin by considering: -- How many supply chains do you have?
-- Where do you need to build capabilities to meet expected cost and
performance objectives?
-- What are the three to five areas within your supply chain which, if
significantly improved, would dramatically enhance your cost and
performance?

About Deloitte
As used in this document, "Deloitte" means Deloitte & Touche USA LLP.
Please see www.deloitte.com/about for a detailed description of the legal
structure of Deloitte & Touche USA LLP and its subsidiaries.
Allyson McKenney Liz Torrez
Deloitte Services LP Hill & Knowlton
amckenney@deloitte.com liz.torrez@hillandknowlton.com
203-708-4406 312-255-3036

SOURCE Deloitte Consulting LLP

Allyson McKenney of Deloitte Services LP, +1-203-708-4406,
amckenney@deloitte.com; Liz Torrez of Hill & Knowlton for Deloitte Services
LP, +1-312-255-3036, liz.torrez@hillandknowlton.com